The South Australian Minister for Small Business has endorsed the position taken by Labor MP Tony Piccolo's private member's bill which was introduced into parliament in December 2009.
The main features of the bill are:
- a new statutory definition of good faith which defines "acting in good faith" as meaning "to act fairly, honestly, reasonably and in a cooperative manner";
- severe new penalties of up to $100,000 for failing to comply with the Franchising Code of Conduct; and
- a new commissioner with dispute resolution powers to make final binding determinations in relation to disputes which arise out of unsuccessful mediations.
The proposed bill has a broad ambit and has the potential to capture franchise agreements outside of South Australia.
If the bill becomes law in its present form, the impact of the proposed changes are expected to be significant and could impede franchisor investment in South Australia. Franchisors not currently operating in South Australia (or for those that are, franchisors considering expansion) may either delay their plans or simply refuse to do business in the State, due to a potential increase in compliance obligations and operating costs.
The South Australian Government expects to release a new draft bill for industry and community consultation by the end of this year.